After ending 2018 on a high note, small business owners are optimistic about the year ahead. Small business owners reported confidence in the economy and their hiring plans. But how will the tightest labor market in decades impact their search for talent? Sharon Miller discusses this and more from the Fall 2018 Small Business Owner Report.
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Sharon Miller: We are in one of the tightest job markets out there. Unemployment rate falling to 3.7 percent, that's the lowest since 1969. That was in September where we had the 3.7percent unemployment rate. I mean, we are at a historic time within our economy, where if you want to work, you're employed. And so, it's really up to the business owners to focus on retention.
Narrator: Welcome to “The Heartbeat of Main Street,” with ForbesBooks and Bank of America. This is part two of our interview with Sharon Miller about the Fall 2018 Bank of America Business Advantage Small Business Owner Report.
Sharon is the Head of Small Business for Bank of America.
Gregg Stebben: Sharon, I'm wondering, in the face of the competitive hiring environment that we're in, how is this impacting employers in terms of numbers? Are you hearing that, oh, we're literally losing this percentage of our workforce? We're trying to hire and it's taking us this long to get people. And then when companies, when there's a delay for companies to actually make the hires they need, what are they doing instead? For instance, are they turning to things like technology?
Sharon Miller: So, as far as the turnover, I mean we don't have the exact number for the overall turnover, but what we did report is within one year, at least 24 percent of small business owners have lost one employee or more. So we do know that. And 11 percent of small business owners said they lost 10 percent or more of their workforce. With 24 percent losing one, that's a quarter of all small business owners. We've got 29 million small businesses in the United States, so that's quite a bit.
Now, some of them were let go, that's about 30 percent, some took a position at a larger company. About a quarter of them said that they took positions at a larger company. So, there's different reasons for people departing, and it's not to say that it's all because the employee decided to get up and leave...I mean, 30 percent were underperforming, so that business owner had to let them go. So that's one thing.
So, we do know that the unemployment rate of 3.7 percent is the lowest it's been since 1969. We have an economy out there where it's tough. It's tough to attract and retain because employees can really have the pick of where they want to go, at least top talent. And so, with that being said, there's some shifting strategies out there by business owners. And some of that, to your point around technology, I would say that the thing that small business owners are modifying their strategy around, they're saying, "We want to give them more flexible work culture. Give people flex time." So, if you want to work 10:00 to 6:00 versus 8:00 to 5:00, you know, just giving them some different hours. Or maybe you work Monday through Thursday, take off Fridays. Those types of strategies, I've heard from business owners that they're doing a lot.
Or letting them work from home. They don't need to come into the office. Social media, they're out there on social media trying to attract new talent to say, hey, here's what we're doing at our company, come to work, we're growing. We are continuing to innovate. And that's all very, very attractive to people coming to work and job candidates. So, there's some different strategies out there outside of just more money or more benefits, but at the heart of it, it does come down to dollars and cents, and we are seeing rising wages out there. We are seeing more business owners implement healthcare benefits or retirement benefits to attract the right employees.
And so, these are all the conversations we're having with business owners every day.
Kate Delaney: Wow, fascinating. So talking about the flexible hours, working from home, etc. So, kind of piggybacking on that, Sharon, how else are small business owners rewarding, we'll say, employees, and then giving back to their communities during the holidays?
Sharon Miller: Well, the business owners out there, when they have the right employees, they're focusing on flexible hours, so that's one thing. Professional development, discretionary bonuses perhaps at the holiday season. Eighty-three percent of small business owners plan to offer perks during the holiday season. Maybe they're going to close the office, they may give a salary bonus, or they may give a holiday party.
So, all of these things feed into that culture that small business owners and entrepreneurs are trying to really deliver for their local business, which spills over to the local community. And keep in mind again, Kate, the advantages of small business employment, it's powerful. You've got less bureaucracy, you got a more collaborative environment, you've got greater responsibility, creative freedom, all these things. A local community impact because small business is local, and that's really attractive.
So I always remind our clients, yeah there's some things that we can continue to implement and get better every day, but don't forget about what it is at the heart you do, and the advantages you already have built in by being a small business.
Gregg Stebben: We're talking with Sharon Miller. She's the Head of Small Business for Bank of America. We're talking about a lot of findings and statistics and information that comes out of their Fall 2018 Bank of America Business Advantage Small Business Owner Report.
And you know, it's interesting that you mention local, Sharon, because one of the things that I found fascinating in the report is a map of the U.S., and you've called out some cities where there tends to be trends about how they're attracting and keeping people. So, San Francisco is most likely to offer flexible hours. In LA, they've had the easiest time finding qualified candidates to fill positions. In Chicago, they're most likely to say small businesses compete with larger companies for talent.
I'm just curious if you have any thoughts on why different markets tend to use different things to attract and keep talent? Is there something culturally going on in those markets that we could also learn about, or do you think that within a business community, small business owners are talking about what's working and using what's working for others to help themselves?
Sharon Miller: I think it's both, and Gregg, you're right, I think because small business is local and it is a lot of word of mouth, and you also have people collaborating in local communities through different chamber organizations or just different events, you are finding that people are talking. I mean, business owners, they're going to their kid's soccer game and talking on the sideline about what's working, what's not.
So, all of this sort of comes together in a community, and that's why we like to highlight it, because maybe someone in San Francisco doesn't know what's going on in Chicago, and we were able to highlight it, and that's also the power of Bank of America, because we do have a footprint across the entire country where we're able to give insights back to our clients to say, you know what, it might not work here, but it sure is working in Chicago. Would it hurt to give it a try?
So, these are some of the benefits of working with a large institution that is national, but operates in 90 local markets. So, we're local enough to be able to have different focuses in our local markets, and that's how we run.
Kate Delaney: Wow, it made me think of something else, the power, of course, Sharon, of what you offer, what Bank of America offers. And let's say for example I'm in Boston and you see the success that they're having in San Francisco with the flexible hours, but we're not really doing that so much in Boston. Do you share that information and say, "Hey listen, here's some of the successes that we're seeing here, and some of the trends," because I would imagine they would gobble that up.
Sharon Miller: We do, and we just launched in four states our Business Advantage 360 program, and this is our...and it will be launched across the country in the first quarter...This is a very powerful digital capability, an online capability for business owners that's really going to change the way they manage their business, that they get insights into just this, that they're able to manage their cashflow.
And so, not only is it through sitting down with our bankers in the 4,500 financial centers across the country where we have business experts, but it's also through our digital capabilities, and going online at BankofAmerica.com/smallbusiness, where you're able to not only access the report we're talking about today, but you're also able to understand what's going on. Different reports, different information for clients. We just launched the Bank of America Institute for Women's Entrepreneurship [at Cornell] because we know that women are a force to be reckoned with, for one, Kate, and I'm sure you can agree. And two-
Gregg Stebben: I can agree, too. I can agree, too.
Sharon Miller: There you go, Gregg ... That we're opening businesses. I mean, when I sit down and I see the trends happening, businesses are being opened at twice the rate of men, by women, with half the capital. And so these are some of the issues we're seeing because we are a larger institution, and we're able to go out and solve some of these problems, or at least to help to solve them and partner up with universities like Cornell to get out the information on what, not just women, but all entrepreneurs, need to be thinking about.
So, all of that is in our website. We've got a Bank of America Community. So yeah, either you want to read about it, you want to go into our financial center, sit down with a specialist, and to me, I would advise coming in, sitting down with a business specialist, because there's no more powerful interaction than that across the desk, because every business owner's unique, just like people, and that's where we're able to help with their priorities.
Kate Delaney: Sharon Miller, Bank of America Head of Small Business. Thanks so much, we appreciate it as always.